Creative Energy: Behind the Deal with InstarAGF Asset Management

February 21, 2018 | By: Jon Jackson

On Feb. 13, 2018, Vancouver-based Creative Energy announced a new partnership with InstarAGF Asset Management, an independent alternative asset management firm focused on North American middle-market opportunities. Through an investment by the InstarAGF Essential Infrastructure Fund, InstarAGF now owns a 50% interest in the energy solutions company, creating a district energy platform positioned for growth in North America.

Currently owner and operator of one of the largest district energy networks in Canada, Creative Energy is a neighbourhood energy utility company made up of city builders, energy innovators and creative thinkers. Serving over 210 buildings in downtown Vancouver, the company is currently developing similar systems in the Greater Vancouver Area and Toronto.

For the latest in CVCA’s “Behind the Deal” series, we caught up with InstarAGF Asset Management to discuss its most recent investment.

Why did InstarAGF choose to invest in Creative Energy and the management team?

Creative Energy’s management team has a proven record of success, delivering a 99.9% reliability rate over its 50 years of operation. In partnering with Creative Energy, InstarAGF is able to contribute skills, expertise and capital to one of the largest district energy networks in Canada. The existing district energy assets, which are regulated and recognized for their reliability and urban innovation, will serve as a high-growth platform to acquire and develop additional district energy projects in communities across North America.

With decades of combined expertise investing in, managing or advising on essential community infrastructure assets, we look forward to working with our partners and stakeholders, including employees, to add value to Creative Energy’s business.

How is Creative Energy’s platform expected to grow?

We are already working with management to advance several urban energy initiatives elsewhere in Vancouver and Toronto, with significant future opportunities for our sustainable neighbourhood energy systems. With InstarAGF’s significant energy and urban infrastructure expertise, and Creative Energy’s history of delivering reliable and innovative energy, we are well positioned to offer community energy solutions across North America.

Our shared vision for Creative Energy is to be a North American leader in sustainable district energy systems for cities and communities.

What is InstarAGF’s anticipation about this sector in the short term and long term?

Looking at infrastructure investment trends, we see significant potential for district energy solutions in North America. It is one of the lowest-cost and highest-efficiency sources of energy, enabling communities to become engaged and control their own resources. It is also a great example of “super-infrastructure”: economic infrastructure that meets energy needs and environmental goals while supporting other forms of critical community development and social infrastructure.

At a time when cities are addressing the challenges of urbanization, land use and climate change, district energy represents a compelling infrastructure solution. Communities account for nearly 60% of Canada’s energy use and over half of all greenhouse gas emissions—district energy systems can integrate renewable energy, combine various forms of power generation to improve reliability, lessen demand on the overall power grid and lower costs for customers. In addition, investing in community energy systems can generate high quality jobs. According to the Canadian Urban Institute, every $1 million invested in building energy efficiency retrofits creates more than nine person-years of permanent employment.

How is Creative Energy addressing community challenges?

District energy is a very interesting sector from the community perspective and can help our cities address trends from urbanization to climate change. Whether retrofitting and renewing an existing facility or building a new system, district energy offers a great energy solution for municipalities and other public institutions—such as hospitals and universities—where essential infrastructure is chronically underfunded.

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